While electric and natural-gas vehicles (and even propane vehicles) are considered viable replacements for those that run on diesel or gasoline, hydrogen incites more controversy and skepticism than all the others combined. Elon Musk, CEO of Tesla Motors, referred to them earlier this year as being “extremely silly” and “fools’ cells.” Of course, having invested much of his fortune in his vision of an electric vehicle, he may be a bit biased.
I, on the other hand, like to call myself “fuel-promiscuous.” Like many fuel retailers I work with, I am impartial and indiscriminate on which alternative fuels will be adopted in the United States. Whatever is best for us, we will sell it. Of course, the big questions are if we can sell it easily and inexpensively enough to get a return on our investment.
The Perfect Car
A few years ago, I believed hydrogen fuel-cell technology to be the greatest opportunity. After all, it is the most abundant element in the universe, leaves no harmful byproducts and is efficient and renewable.
It is exciting to see Japan and the state of California supporting the development of vehicles and infrastructure, and companies such as Toyota investing heavily in the technology. Michio Kaku, a theoretical physicist and best-selling author, thinks Toyota has developed the perfect car in the Toyota Mirai, a hydrogen fuel-cell vehicle priced at $57,000 and with a range of 300 miles.
I was honored to visit Toyota in Southern California and test drive a fuel-cell vehicle, and I was impressed with the response and the quiet ride. In fact, other than the near silence of the engine, you would have thought it was an internal-combustion engine. Personally, I would love to own one.
Of course, the skeptic in me also focuses on the costs and obstacles of implementing this technology, as well as the adoption by consumers in light of a dearth of refueling locations. Toyota understands this and expects to produce only 700 vehicles for global sales this year, and reportedly another 2,300 in 2017.
Separation Anxiety
For now, it is expensive to isolate and produce hydrogen, regardless of its abundance. And while hydrogen is touted as producing zero greenhouse gas, hydrogen is generally produced through steam methane reforming from natural gas—which emits a quantity of CO2. It is also an extremely light gas, which makes it difficult to transport, and there is no pipeline infrastructure today similar to that of natural gas by which it can be transported.
And speaking of natural gas, retailers that thought a $1 million investment to sell compressed natural gas was excessive will positively reel at the thought of investing more than $2 million to retail hydrogen. Of course, all indications are that improvements are being made in all of the above areas, the most noteworthy of which being hydrogen production through solar energy.
In September, the Fuels Institute conducted a Hydrogen Refueling Summit in Indianapolis. The goal was to evaluate market development strategies that enable a viable return on investment for those retailers investing in hydrogen refueling infrastructure.
The summit revealed many things must take place before the market will be ready for retail investment. One critical element is that retailers will need a better indication of what consumer demand might look like in their area. The projects being launched in California and Massachusetts should go a long way toward ironing out the logistical issues. Costs in these markets are being shouldered by the government and auto industry for now. For retailers to assume the cost, market indicators will have to be clear and strong.
Not Fade Away?
Ultimately, the real question to me is whether hydrogen fuel-cell vehicles are destined to become only a short-term solution to the range anxiety issues of electric vehicles. Will advances in battery storage and charging capabilities make electric vehicles a more attractive solution than the hydrogen fuel cell? Also, will the expected continuation of a worldwide glut of oil and the resulting low retail price of gasoline inhibit both technologies, short of government intervention regarding greenhouse gases?
This summer I visited Fort Jefferson in the Dry Tortugas off the coast of Florida. In its time it was a state-of-the-art fortress, a massive gun platform impervious to assault and able to destroy enemy ships foolish enough to come within range of its powerful guns.
However, the development of rifled cannons and armored ships made the fort obsolete while its construction was underway, and it was never completed. Only time will tell if technological advances will render electric vehicles and/or fuel-cell vehicles obsolete.
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